Auditing - Vouching of Purchase Returns | 11th Auditing : Chapter 8 : Vouching of Trading Transactions
Chapter: 11th Auditing : Chapter 8 : Vouching of Trading Transactions
Vouching of Purchase Returns
Vouching of Purchase Returns
Goods returned by the client to the suppliers due
to poor quality, defective goods and goods not according to the sample are
recorded in the Purchase Returns Book. When the goods are returned, the
supplier’s account should be debited. The debit is made through the purchase
returns book on the basis of a Debit Note. The supplier, on receipt of the
debit note issues a Credit Note indicating the acceptance of the debt.
Auditors Duty
Auditor before vouching purchase returns, should
ascertain that a proper system of internal check is in existence and should
ensure that full credit is obtained for all goods returned. Further, the
auditor should proceed to vouch purchase returns in the following manner:
1. When goods are returned, auditor should verify
whether it is properly recorded in the Purchase Returns Book or Returns Outward
Register.
2. Auditor should verify the debit note issued by
the client to the supplier or the credit note issued by the supplier.
3. He should vouch the quantity returned with the
Purchase Returns Book, Gatekeepers Outward Register, storekeepers record and
credit notes received from the supplier.
4. The auditor should verify the purchase returns
of the first and last month of the year to avoid manipulation of accounts.
5. The auditor should ensure that current year’s
returns are not accounted in the subsequent year.
Books and Documents to be Vouched: (1) Debit Note, (2)
Purchase Returns Book or Returns
Outward Register, (3) Suppliers Account, (4) Gatekeepers Outward Register.
Example
On 15.1.2017, X Ltd. returned 10
damaged cotton shirts to Goyal Mills, Ahmedabad.
Vouching of Purchase Returns
Auditor should vouch the transaction
in the following manner:
1. Verify debit note which is issued
to the creditor or supplier for goods returned.
2. Verify entry in Purchase Returns
Book with respect to debit note, date of return, name of supplier and amount of
return.
3. Verify entry in Creditors or
Suppliers Account with regard to date and amount of return.
Related Topics